Grace Kennedy sells H&L interest
Grace Kennedy has sold its 58.15 percent interest in Hardware & Lumber (H&L) with the shares traded over the Jamaica Stock Exchange floor today by broker – GK Capital Management in the amount of 47,013,417 shares at $18.50 each.
The shares are sold to, Argyle Industries Inc. (“Argyle”) a St. Lucian Company special purpose vehicle incorporated for the purposes of acquiring and holding the Investor’s equity interests in Hardware & Lumber. The investors in Argyle include a group of investors led by, ABBECO INVEST S.A. ( a Bahamian investment company), Sterling Asset Management along with its affiliates and associates and Greystone Equity Partners Inc. along with its affiliates and associates a release from Grace Kennedy said.
Grace Kennedy Group CEO, Don Wehby, stated “As previously indicated GraceKennedy’s decision to sell our shares in H&L was not an easy one, however, this divestment is consistent with our present strategy of concentrating on the food business locally and internationally and financial services in the region.” He added, “I feel very positive about the continued growth of H&L under the prospective new owners, Argyle, who are excited about the possibilities for the future.”
H&L comprises the Rapid True Value and the Agro Grace business. There are currently 10 Rapid True Value outlets across Jamaica, along with six Agro Grace Retail Centres. The company is headquartered at in Kingston.
The buyers will be required to make an offer to buy the remaining shares at the same price of $18.50.
Near 20% tTech shareholders
tTEch’s the technology company that offered shares to the public in December has released details of the successful offer of 25,652,000 ordinary shares at $2.50 each that closed on December 16, 2015.
The issue attracted 289 applications, valued at approximately $172.395 million.
Based on the level of oversubscription, applications for the general pool (57 percent of the shares offered) will receive 100 percent up to 10,000 shares applied for and the remaining shares will be allocated on a proportional basis equivalent to approximately 19.96 percent of the total application amount. Reserve share applicants (35 percent of the shares offered) will receive 100 percent of the number of shares they applied for.
The shares are expected to be listed on the junior market of the Jamaica Stock Exchange in January.
JSE main market falls junior jumps
The main market of the Jamaica Stock Exchange shows moderate losses in the indices but the junior market is up strongly by 49.46 points to a new record of 1,775.52 The JSE had technical issues with the feed of live trading data that delayed posting of the data.
Subsequent to 10.30 am Gleaner traded 2.76 million shares at $1.25 as the RJR meeting to vote on the merger with the Gleaner’s Media business is on the way. Information is that management has made their case and shareholders are now addressing the group, including a small shareholder who is opposed to the deal.
Cargo Handlers growth slows
Cargo Handlers profit for the year to September was barely higher than for that of 2014 at $136 million versus $132 million but the company had some one-off expenses amounting to $16 million. Revenues climbed to $252 million from $236 million in 2014.
The final quarter of the year saw lower revenues of $67 million, down from $79 million in the September 2014 quarter while profit fell 40 percent to $29 million from $48 million in 2014. Cargo Handlers recorded earnings per share of $3.63 versus $3.52 in 2014.
Going forward, the tax free holiday the company enjoyed from December 2010, ends in November this year and moves to 12.5 percent for the next 5 years. This will dent profits a bit, added to that, the company made $6 million in foreign exchange gains in 2015, that looks uncertain going forward with the adjustment in the value of the Jamaican dollar that now seems appropriately valued, but for likely moderate movements in 2016.
Unless there is a dramatic change in revenues, profit after tax for 2016 should grow marginally to around $145 million or $3.87 per share.
The company ended the year with $151 million in cash included in current assets of $203 million and only $15 million in current liabilities. Equity is $245 million with virtually no interest bearing debt. The stock which is listed on the junior market of the Jamaica Stock Exchange last traded at $37.50. Two dividends amounting to $2.35 per share were paid during the year.
RJR shareholders set to halt merger
A number of the larger shareholders are of the view that the deal does not benefit them as much as it bails out a struggling Gleaner that has had great difficulty making a profit from the media business for several years now.
One point put forth is that is that print media is not an area of growth compared with the electronic media, that is seen as having good growth potential. The effect of the merger would result in a dilution of the RJR shareholders interest the disgruntled shareholder say and that appears to be the case initially. The proponents of the merger says there will be savings and added revenues amounting to $275 to $450 million that will enhance the fortunes of the new group, but only half of that will be attributable to the existing RJR shareholders.
What have not been said publicly, is that since the valuation in March, much have changed with RJR fortunes improving and Gleaner’s lagging, which would most likely change the values of each.
For the nine-months, the Gleaner made $130 million net profit or 122 per cent more than the $58.6 million earned a year earlier. Revenues continued its downward drift, by 5.6 percent to $2.38 billion, partially helped by a fall of $34 million in investment income to $90 million while media income fell $120 million for the same period. RJR was going in the opposite direction with profit jumping 227 percent in the September quarter to $30 million and 44 percent in the June quarter to $22 million from revenues that rose 24 percent in the September quarter and 7 percent in the June quarter.
IC Insider’s forecast is for RJR to make $320 million for the year to March based on existing operations and for the Gleaner to report $240 million for the year to December 2015 from all its current operations.
Apart from Gleaner offering the media assets they will contribute $665 million in cash and equivalent. While the latter could theoretically buy around 50 percent of RJR’s current outstanding shares, at existing prices under $4, supply would not allow them to do so. By pumping in the funds that is likely to be earning very low returns until they can be used in an efficient manner, will result in dilution of existing RJR shareholders’ interest.
With 75 percent of shareholding required to approve the deal, there are enough disgruntled shareholders on the RJR side to vote it down. Based on feed-back received from some larger holders, it appears that at best the principals of both companies will have to go back to the drawing board and involve the larger shareholders in the talks if they are to succeed, something Chairman of the Gleaner Oliver Clarke says he is not opposed to.
Shareholders openly opposed to the deal, account for 49 million shares or 13.7 percent others who have been opposed at least up to recently, would bring the tally to more than 21 percent.
Jamaican $ revalues on Tuesday
The Jamaican foreign exchange market trading activity on the final Tuesday in 2015, rose above Monday’s levels with dealers buying almost the same amounts as they sold. The value of the local currency recovered slightly against the three majors as inflows into the market rose to more normal levels for this time of the year.
Dealers bought the equivalent of US$45,261,760 and sold US$44,691,797, compared with US$31,609,960 and US$32,521,826 respectively on Monday.
Sale of US dollars , exceeded the amount dealers bought by US$2 million. Dealers bought US$40,016,157 compared to US$28,536,776 on Monday. The buying rate for the US dollar rose 19 cents to $119.64. A total of US$41,999,216 was sold versus US$31,277,510 on Monday as the selling rate fell 10 cents to $120.32. The Canadian dollar buying rate rose $1.01 to end at $83.76 with dealers buying C$2,901,378 and selling C$1,872,608, at an average rate that fell $1.12 cents to $85.89. The rate for buying the British Pound dropped by $1.38 to $175.10 for the purchase of £1,899,154, while £857,233 was sold, with the rate falling 10 cents to $177.14. At the end of trading, it took J$132.12 to purchase the Euro, for a rise of 23 cents from Monday’s rate, according to data from Bank of Jamaica, while dealers purchased the European common currency at J$129.09, rising by 12 cents from Monday’s rate. The US dollar equivalent of other currencies traded, amounts to US$434,750 being bought, while US$93,951 was sold.
Highs & Lows| The lowest buying rate for US dollar fell 9 cents to $98.61 while the highest buying, the highest and lowest selling rates were unchanged at $$120.70, 126.47 and $116, respectively. The highest buying rate for the Canadian dollar rose 75 cents to $87.20, the lowest buying rate fell 30 cents to $68.31. The highest selling rate remained at $90 and the lowest selling rate lost 50 cents to end at $80. The highest buying rate for the British Pound, dropped $3.80 to end at $179. The lowest buying rate was unchanged at $142.84 and the highest selling rate rose 85 cents to $185 while the lowest selling rate fell 15 cents to $170.55.
Quiet day on TTSE – Tuesday
The Trinidad and Tobago Stock Exchange continued trading on the last week of 2015 on a subdued but mixed note, with only 7 active securities. At the close the prices of 2 stocks rose, 2 declined and 3 remained unchanged as 80,119 shares changed hands valued at $1,213,579.
The Composite Index ended with a fall of 0.13 points to 1,159.90, the All T&T Index gained 0.02 points to 1,947.80 and the Cross Listed Index fell 0.04 points to end at 48.95.
IC bid-offer Indicator| At the end of trading there are signs that the number of stocks gaining could rise with IC Bid indicator showing an increase number of stocks with higher bids than in recent trading days. The Investor’s Choice bid-offer indicator had 9 stocks with bids higher than the last selling price and 6 stocks with offers that were lower.
Gains| Trinidad and Tobago NGL closed with a gain of 1 cent to end at $21.01 with 5,928 shares changing hands and West Indian Tobacco gained 1 cent with 4,528 units changing hands to close at a new 52 weeks’ high of $126.27 valued at $571,751.
Declines| Grace Kennedy lost 5 cents with 60,245 units changing hands at $4.01, Massy Holdings ended with a loss of 1 cents at a 52 weeks’ low of $61.45 while trading 779 shares.
Firm Trades| Trading in First Citizens ended with 6,019 units changing hands to close at $35, One Caribbean Media traded 88 shares with the price remaining at $22 and Sagicor Financial Corporation traded 2,532 shares at $6.10.